Ethical Challenges of Business in the New Economy

CEMS Blocked Seminar

September 1-7, 2013, Balatonszemes, Hungary

Nel Hofstra

Erasmus University Rotterdam

the Netherlands

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Engaging in Progressive Entrepreneurship

Entrepreneurship Inspired by Nature

Towards a Regenerative Business

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Fundamental question for economic sciences:

• How dow we wish to live and what is the role of economics in such living?

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Criticism

• destructive for the human spirit and the planet alike• rapid depletion of the world’s natural resources• domination of mankind (anthropocentrism)• dehumanization of labor (machine)• failure to bring ‘noneconomic’ factors into the

calculation of business life and policymakers

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Wealth or welfare?

Conceptual basics in mainstream economics

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• Homo Economicus; (bounded) rational, selfish,

• Tied to material and financial world

• Maximilization of individual profit and utility

• Sources to be exploited and exhausted

• Development of techniques to drive down the costs of labor, as a source for competition and maximizing profits

Current allocation model:

• Financial crisis (CAPITAL)

• High unemployment rates (LABOR)

• Continuing destruction of the environment (NATURE)

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The intensity with which sustainable market developments take place are confronting firms more and more with a constraint between efficiency, effectiveness and cost minimalization (exploitation) versus flexibility and innovation (exploration).

These constraints require new insights in economic processes and economic theories.

One of these new insights is to go beyond sustainability and create

Regenerative Business

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Till now economists have given scant attention to the concept of

Nature.- not embedded in models en theories

- neglecting the role of nature and it’s impact- seen as an isolated phenomenon.

As a consequence we hardly know anything!

Some views on Nature• - the idea of an unchanging nature

• - the centre of the cosmos of a closed universe, with God in the outer atmosphere

• - something concrete, lively and qualitative, observable and explicable by ways of deduction from general accepted principles

• - a heliocentric perspectives assumes the sun to be the centre of the infinite universe

• - nature as an abstract, quantitative perspective

• - a collection of natural resources11

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In general there are several ideologies and motives to conserve Nature:

for example economic, esthetical, ethical, technological, medical, educational and knowledge-theoretical ones.  

 Nature Human Being

Competitor Mother EarthPlanet EarthSpaceship EarthProduction Resource

Exploitation Room

Patient

DefenderSurvivor, Lover, ChildMasterPilotExploiterGuardianHomo Economics

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• Our perspectives on Nature determine what we see as nature (definition and demarcation), how we evaluate and estimate environmental problems (analysis), how we evaluate and judge situations (diagnosis) and how we seek to conserve nature to prevent future problems (applications and policies).

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• How we perceive Nature is how we treat Nature.

• Regenerative sustainability as an emerging concept in (business-) economics is generating many conceptual changes.

• •

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This means a shift:

• From Profit to Value thinking• From Shareholder to Stakeholder thinking• From Targets to Vision and Mission• From Competition to Cooperation• From exploitation of natural resources to

exploration and regeneration of nature• From anthropocentrism to eco-centrism• From partial to fully responsibility

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Important questions then are:

What characteristics of the firm create a positive relationship with the ecological

environment ?What conditions are necessary in

assessing a quality based entrepreneurship?

And how do ecological relationships create business value?

Nature

• The idea that people have to act according to nature implies several aspects.

• - to discern and respect 'reason' in all things and livings (system-thinking)

• - to discern and respect 'law' in all things and livings (cyclical thinking)

• - to discern and respect 'divine' in all things and livings (soul and self feeling and humility, indigenous knowledge).

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In economic studies of resource allocation land or nature and environment are not embedded.

Economic theory neglects the role of nature and environment.

Nature is seen as an isolated phenomenon.

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The Earth is a complex system of subtile interrelationships among the air, water, soil, animals, plants, and microbes-the only planet like it in our solar system.

We have only have one home, the Earth, and we have an important mission-to leave it in livable condition for future generations.

Every member of humankind is a passenger on spaceship Earth or child of Mother EarthWe must supercede national boundaries and generational differences toview the future of the Earth from the perspective of the whole of humankind, undertaking new activities as earth citizens.

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We Earthlings, think we are superior species within this system

Sun

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Moon on August 16th 2008

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Jupiter

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Neptune

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Mars

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The Earth

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The Earth is a complex system of subtile interrelationships among the air, water, soil, animals, plants, and microbes-the only planet like it in our solar system.

We have only have one home, the Earth, and we have an important mission-to leave it in livable condition for future generations.

Every member of humankind is a passenger on spaceship Earth or child of Mother EarthWe must supercede national boundaries and generational differences toview the future of the Earth from the perspective of the whole of humankind, undertaking new activities as earth citizens.

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Regenerative Business is the entrepreneurial process of change

between the use of resources,the direction of investments, the orientation of technological developments and institutional

change in order to revitalize and renew energy and materials sources, to enlarge its current and

future value and to produce positive restorative and regenerative impacts upon their ecological,

social and economic systems (Hofstra, 2013)

Remarkable

• Economic science failed in solving environmental problems

• New emerging knowledge is a prerequisite for the transformation of our world

• Regenerative sustainability is a challenge

• Entrepreneurs are able to discover regenerative innovations and bring them to markets (problem recognizition)

• The young generation is more flexibel and adaptive to new ideas

• Sustainability is COOL and PROFITABLE

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‘Profit’ is not a dirty wordBusiness is a Tool

• Profits are surplus income generated by good enterprises

• Profits are necessary to reach the goals desired

• Business is a vehicle we design and build

• to create more income, options, choices and liberty and to fulfill our dreams

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Green gadgets

• Visa Greencard

• News bags of used materials

• Bamboo t-shirt: fair, cool, dry, soft

• Recycled U Roads shoes (www.uroads.com)

• Wooden memory stick (www.ooms.nl)

• Solar energy radio and lamps (freeradio)

• Eco Sneaks, shoes for a happy planet (www.simpleshoes.nl)\

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Green cosmetics • Garnier Skin Naturals

• L’Occitane: skin cleanings based on exfoliating Rice Powder of the Camargue

• Embellier: japanese cosmetics based on red and black Reishi mushrooms

• Living Nature: gentle cleansing shaving gel based on the medicinal working of plants from New Zealand

• Greenland Bio=Logic massage oil

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Eco-Innovations

• Recyclable Plastic Bike Source:ohgizmo.com

• Tofu packed into balloons Source:boingboing.net

• Biodegradable milk bottle: Greenbottles

• Zelfo is a strong, light 'plastic from plants' produced by means of a sustainable process

• "Greensulate", an organic, fire-retardant board made of water, flour, oyster mushroom spores and perlite, a mineral blend found in potting soil. Source:content.msn.co.in

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• A company called GreenPix has created a combination of sustainable technology and digital media virtuosity, dubbed the Zero Energy Media Wall. The system features the world's largest (so they claim) color LED display, powered completely by photovoltaic cells which are integrated into the glass curtain. During the day, the wall -- located on the Xicui entertainment complex in Beijing -- harvests solar energy, then expends the charge at night in a display of undulating colours.

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cargo vessel with innovative auxiliary propulsion systemcargo vessel with innovative auxiliary propulsion system

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The first sustainable, self sufficient dishwashing solution that cleans and sterilizes using steam

The first sustainable, self sufficient dishwashing solution that cleans and sterilizes using steam

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Kicking off in Rotterdam's Off_Corso on October 14th is the Sustainable Dance Club. The kick-off party will feature biological beer on tap and fair-trade clothing brand Kuyichi helping clubbers customize their clothes. The end concept will go much further. Enviu, an environmental NGO for young people, is working together with architectural firm Döll to create a truly sustainable nightclub. The club they envision will feature energy-generating dance floors (excellent way to extract kilowatts from energetic clubbers), toilets that flush with rain water, walls that change colour as a reaction to temperature changes, a rooftop garden and other elements that combine to create a sustainable clubbing environment. Working with the Technical University of Delft and the Development Board of Rotterdam, Enviu and Döll aim to build a club that will be fun and profitable, yet will have a low impact on the environment, while raising awareness for social and environmental issues. Some 80 Enviu volunteers (young professionals and students) have developed the concept over the last 8 months. )  

Eco-Innovation concept• The idea of eco-

innovation is fairly recent.

• One of the first appearances of the concept is in the book of Claude Fussler and Peter James (1996): Driving Eco-Innovation: A Breakthrough Discipline for Innovation and Sustainability

• Definition: new products and processes which provide customer and business value and significantly decrease environmental impacts

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Related Concepts

• Sustainable design• Sustainable architecture• Environmental

technology• Eco-efficiency• Biodiversity• Industrial Metabolism

• Quit NEW concepts!!!• Crade2Cradle• Healing materials• Biomimics• Learning from Nature• Bioneer• Eco-effectiveness• Regenerative eco-

innovations

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The Cradle to Cradle concept is using nature as a design for the development of important innovations, meanwhile creating a sustainable relationship between man and nature. It is applicable on large and small scaled projects and have been implemented already successfully (see above) The focus is on the development of intelligent production systems.The Bioneers movement is using nature by conserving it for current and future generations. Holistic solutions are sought without damaging the environment. The focus now is on education and consciousness and business applications are prospective objectives. (Dreaming New Mexico)Biomimics is a discipline based on system dynamics and chemistry, focused on innovation inspired by nature, as model, measure and mentor. It has been applied till now on a small scaled level by the development of new products and materials. Greening the industry is a main intended goal.  

• Eco-efficiency is serving the economic quality of being able to meet ecological issues and regulations successfully in the short term, without wasting time, costs and materials as far as possible and for the benefit of human bening.

• Eco-effectiveness refers to solutions to create materials accrued for human and natural purposes, improves the quality of life, while delivering goods and services, create sound solutions and follow nature in mimicking it to reach the final results intended and with efficacious potential for still unknown, future societal and ecological problems.

Table : Eco-innovations related to human-nature relationships

Hofstra, 2011

Eco-Innovations Exploitative/degenerative

Restorative Cyclical Regenerative

Human-Nature Contradiction Separation Connection/

Connectivity

Unity

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Exploitative or degenerative eco-innovations give little or no attention to the environmental impact of the product design and subsequent processes. Generally, they are designed to meet legal requirements based on minimum cost-analyses to move rapidly to expand their market segments.  Restorative eco-innovations, although they are often called ‘green’ they do not challenge current business methods and consumption patterns. They are focused on maximizing eco-efficient processes to minimize energy use, pollution and waste. In the best case, their impacts are neutral or they produce zero-emissions.

• Cyclical eco-innovations, consider the connectivity of humans in their social and cultural structures as integral constituents of the ecosystems, in which design is an ongoing process for improving the capacity of the system, based upon providing feedback and control mechanisms.

•  • Regenerative eco-innovations, are innovations in

which the vitality of the eco-system is used to create added value for humans and nature. In this type of eco-design the diversity and uniqueness of nature is understand and is crucial for the design of eco-innovations.

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Marketing Course I/KLoosterman 2011

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Eco-Innovations  

Exploitative/Or degenerative

Restorative

Cyclical Regenerative

Human-Nature

Contradiction

Separation

Connection/Connectivity

Unity

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PERSPECTIVE ON MAN AND NATURE 

  UNITY

   CONNECTION

   SEPARATION

   CONTRADICTION

 METAPHOR 

 Mother Earth

 Planet Earth

 Spaceship Earth

 Production Resource

VISION ON NATURE

KosmosWilderness

UniverseLandscape

CreationMachine

Reservoir

HUMAN RELATIONSHIP

LoverChildSurvivor

Stewardship PilotManager

MasterExploiter

BASIC ATTITUDE

DesireReverenceHumilityConcern

Respect,Exploring

Engineering,Power, Control

DisrespectUtilityExploiting

RELATIONSHIP WITH NATURE

Reciprocal Observing LeadingDirecting

Superior

AUTHORS Heraclitus, Anaximander, PlatoRousseau, Van Humboldt, Goethe

Thomas van Acquino, Darwin

Newton, Descartes, Linnaeus, Copernicus

Economic and ecological scientists

ECONOMICS 

Circular Managerial (Neo-) classical (Neo-) classical Resource-based

ECOLOGY GaiaBiomimicryBiodiversityDeep EcologySelf-healingRenewal 

Industrial metabolismCradle to CradleEco-effectiveness

Design for EnvironmentEnd-of-pipeCleaner Production

Eco-efficiency  

 ECO-INNOVATON

 Regenerative

 Cyclical

 Restorative

 Exploitative

How can entrepreneurs improve and progress the development of

cyclical and regenerative eco-innovations?

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Team assignment

• Think about new products or services that restore and regenerate

• Assess the feasibility of your new business

• Prepare a short presentation

• You have half an hour to discuss and prepare

• BE BACK IN TIME

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What problems did you really solve with your idea?

What did you contribute?

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Wubbo Ockels, Dutch astronaut:

• ‘’The moment at which I saw the small earth, it was a shock’’

• ‘’We have to learn to play with Nature’’

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